Week 4 Flashcards
Market Analysis
examines both market potential and the marketability, or competitiveness, of the proposed project
Demand (end users)
Buyers or renters
Supply
Competitors- both existing properties and those at various stages in development
Demand Side
What is needed?
How much is needed?
Where is it needed?
Data - - population
- number of households
- demographics
- income
Supply Side
What already exists?
What is in the pipeline (planning/constructioning phase)?
Converted/retrofitted
Data
- vacancy rates
- existing inventory
- recent absorption
- market rent
- features of existing projects
Who uses market Studies?
1)Developers
2)Government Officials
3)Investors and Lenders
4)tenants or buyers
Developers Why
- Determines whether a location is suitable for development
- Identify a product or mix of products that best meet the demand of that local market
- Identify existing and potential competition
- identify the demand for the project
- project pricing and phasing
Government Officials Why?
- Understand the community or regions housing demand
- Identify affordable housing needs
Investors and Lenders WHy
- Do prospective buyers or tenants exist, and will they be attracted to the location?
- Will the project lease up or sell as per the proposed timeline
Tenants or Buyers
- Commercial tenants (office, retail, warehouse etc.) will do their own market research when signing or extending a lease. (Broker services available)
- Corporate real estate will analyze the pros and cons of different metropolitan areas
Who Completes these Market Studies?
- Consultants
- Brokerage firms
- Appraisal firms
- In- house Analysts
First Home Savings account
Tax Benefits: withdrawals for purchasing a first home (including investment income) are tax- free
Contribution Limits: 8,000 a year up to 40,000
Approach to real Estate Market Studies
- Describe the region (demographics)
- Define Market area (size and shape of area)
- The site (Benefits of visiting site)
Demand Analysis(Who is your development for)
Supply Analysis(Look at existing and planned competition)
Capture Rate
the share of the projected demand growth that a project must attract to fill its rentable space or to sell its lots or homes
Absorption Rate
The pace at which the proposed project will be able to sell or lease, Important to include in the financial feasibility model
